Fashion retailer French Connection could be forced to stay in loss-making UK
stores for up to 11 years, posing a significant obstacle to its turnaround
plans.

Shares in the retailer slid 8pc after it posted a £6.3m pre-tax loss for the first half of the year and investors were left underwhelmed by proposals from boss Stephen Marks to revitalise its high street business.

Mr Marks, the chairman and chief executive, wants to improve French Connection’s clothes with a new design team, offer a greater range of clothes within stores and increase the number of staff working during peak trading hours in the afternoon.

Mr Marks said French Connection has offered to buy itself out of leases but landlords are refusing to help because the company has net cash of £21.2m

“Because we have net cash, landlords are not interested,” he said. “We have tried to offer money to get out but they want us to stay in for the lease term.”

French Connection has 73 stores in the UK out of 396 worldwide.

Despite the property issues, Mr Marks said he is “very confident” the initiatives to improve the retail business will work.

He added: “We are confident we will return our business to profit.”

However, analysts said the plan, which is the result of a six-month review, missed a “big bang”.

Nick Bubb, an independent retail analyst, said: “The new initiatives focus on improving store operations, developing the product offering and improving merchandise management but, until French Connection can get out of the leases of some of its loss-making stores, it is hard to see how things will change a lot.”

French Connection revenues fell from £103m to £96m in the six months to July 31, meaning the company slid from a £700,000 profit into the red. The company will not pay an interim dividend.